SHAKTI AGENCIES Vs. MANSHUK BHAI INDUSTRIES LTD

JUDGEMENT

(1.) MEANINGFUL question that emerges in this petition is whether winding up petition is a legitimate means of seeking to enforce payment of a debt which is bona fidely disputed by the company?

(2.) UPON failure to honour the outstanding dues, the petitioner firm gave a statutory notice to the respondent company under Section 434 of the Companies Act, 1956 (for short `the Act'), demanding due payment towards principal amount with interest but the respondent company failed to make payment within statutory period, as a result of which the petitioner firm was led to file instant company petition for winding up under Section 439 read with 433 (e) of the Act.

(3.) IN M/s. Madhusudan Gordhandas vs. Madhu Woollen INdustries (1971) 3 SCC 632, their Lordships of the Supreme Court had occasion to consider the circumstances under which the court is justified in ordering winding up of the company. It was indicated in paras 20 and 21 thus:- " 20. Two rules are well settled. First, if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court had dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable See London and Paris Banking Corporation (1874) LR 19 Eq 444 ). Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been properly was not allowed. See Re. Brighton Club and Horfold Hotel Co. Ltd. (1865) 35 Beav 204 ). 21. Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt, see Re. A Company (94 SJ 369 ). Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantify the debt precisely see Re. Tweeds Garages Ltd. (1962 CH 406 ). The principles which the court acts are first that the defence of the company is in goods faith and one ob substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends. "